Should I charge VAT as a self-employed entrepreneur
As a self-employed entrepreneur, you can benefit from VAT exemption.
VAT exemption allows you to be exempt from charging VAT on your invoices (your invoices must indicate "VAT Exemption - small business scheme") and generally not have to submit a VAT return.
In return, you will not be able to "recover" VAT on your business expenses.
To benefit from VAT exemption, your turnover (collected income on a cash basis) for the calendar year must not exceed €25,000.
Attention! The threshold calculation is prorated over 12 months in the case of starting activity during the year.
Example: I start my activity on July 1, 2024, so the threshold will be €12,500 instead of €25,000.
I operate as a company, can I benefit from VAT exemption?
Yes, the VAT exemption regime is available to all VAT payers, regardless of the legal form of your company.
Option for VAT exemption:
For new businesses:
If you wish to opt for the VAT exemption regime and meet the conditions, indicate your choice in form 604A.
For existing businesses:
To request the exemption regime, you must submit an amended VAT identification declaration (form 604B) via MyMinfin.
There are two possible entry dates into the regime:
1st of July: you must submit the request before the 1st of June
1st of January: you must submit the request before the 15th of December
More information can be found here: VAT exemption
In case of exceeding the threshold
If your turnover for the calendar year exceeds €25,000, you will generally lose the benefit of the exemption regime and switch to the regular VAT regime.
Exiting the VAT exemption regime has the following effects:
You must inform your local administration promptly by registered mail
Submission to VAT for the first transaction following the threshold being exceeded
You can generally deduct VAT on your professional expenses from the same date, and even some past expenses (under certain conditions)
You must file an annual client listing declaration
Example: you exceed the threshold in September 2024. The first VAT return will be for the third quarter of 2024, which must be submitted no later than October 20, 2024.
What if I think I will temporarily exceed the threshold?
If you anticipate an exceptional exceedance, you can benefit from tolerance from the tax authority. In this case, you must inform your local administration by registered mail, stating that you expect this not to exceed 10% (i.e., €27,500) and that it will be exceptional.
I do not exceed the threshold, can I voluntarily opt for VAT payment?
Yes, it is possible to change your VAT taxation regime voluntarily and leave the exemption regime.
Similar to applying for the exemption regime, you must submit an amended VAT identification declaration (form 604B) via MyMinfin.
There are two possible change dates:
1st of July: you must submit the request before the 1st of June
1st of January: you must submit the request before the 15th of December
Attention, if you leave the VAT exemption regime (by voluntary choice or due to exceeding the threshold), you will not be able to return to it until January 1st of the third year following your regime change..
Example: If you leave the VAT exemption regime in July 2024 (due to exceeding the threshold or by choice), you will not be able to re-opt for the exemption regime before January 1st, 2027 (the option must be submitted before December 15th, 2026).
Should I opt or not ?
The decision to opt (or not) for VAT payment will depend on several factors:
Pros:
Invoicing VAT allows me to reclaim VAT on my business expenses.
Invoicing VAT has a neutral impact on my business relationships with other professionals who can deduct VAT.
Invoicing VAT may give my clients the impression that I have already exceeded the threshold for exemption and strengthens my professional image.
Some clients even require their suppliers to invoice VAT.
I don't have to worry about exceeding the threshold of €25,000
Cons:
Invoicing VAT will require me to regularly submit VAT returns.
Invoicing VAT may increase the cost of my services if the client cannot deduct the invoiced VAT (e.g., an individual, an association, a school, a healthcare institution, etc.).
What steps should I take on Malt if I exceed the VAT threshold or if I opt for VAT?
You must change your legal status to the following: "Self-employed / Micro-business with VAT option”
You must indicate 21% in the"Taxes" tab of your profile.
You can then modify your missions as follows:
Ongoing mission (invoice not issued):
For short missions, you can modify the quote directly from the mission URL and manually adjust the VAT rate to 21%.
For recurring missions, you will need to contact support@malt.com so that we can update the mission for invoices that have not yet been issued.
Completed mission (invoice issued):
You will need to contact your client to obtain their written agreement to reopen the invoice(s). You must send us an email to support@malt.com with the proof of the client's acceptance (email or screenshot) , along with the invoice number(s) to be modified. We will then issue a credit note for the amount already paid while issuing a new invoice that includes VAT.
Invoicing a client established abroad
Your client is established in another Member State of the European Union:
If they provide you with their VAT identification number (to verify its validity, click here): you invoice "without tax" and you indicate on the invoice "reverse charge - art. 21 § 2 of the Belgian VAT Code" or "reverse charge - art. 196 of Directive 2006/112/EC”
If your client does not have a valid VAT identification number: you invoice with Belgian VAT (unless you are VAT exempt)
Your client is established in a third country outside the European Union: you invoice "without tax”
Whether you are VAT exempt or liable for VAT, if you provide a service to a client (B2B) in another EU country, you will have to file an "intracommunity statement”.
Only VAT-exempt businesses can submit the statement in paper format (form #723).
Others will need to make the declaration online, using the Intervat application.
You receive an invoice from a supplier established abroad (including the fees of an entity Malt abroad)
A supplier established in another EU Member State will ask for your VAT identification number when issuing their invoice. If you have such a number, the supplier will typically invoice you with a 0% VAT rate, mentioning the reverse charge mechanism. If you do not have a VAT identification number (e.g., you benefit from VAT exemption), the supplier will invoice you with the VAT rate of their country of origin.
A supplier established outside of the European Union will also typically invoice you "without tax".
In both cases, if you receive an invoice "without tax", you must apply the reverse-charge mechanism. This means you will have to pay Belgian VAT at the rate of 21% on this invoice. This payment is made through your periodic VAT return or on the special VAT return (if you benefit from VAT exemption).
This reverse charged VAT can typically be deducted on your VAT return (and thus have a neutral effect on your situation), unless you benefit from VAT exemption (in which case, you cannot deduct VAT on your business expenses).